Barron’s Roundtable: Bullish on Gold

By Brendan Conway

Allow me to pluck a few items of interest for holders of funds such as SPDR Gold Trust (GLD), iShares Gold Trust (IAU) or Sprott Physical Gold Trust (PHYS), or Market Vectors Gold Miners (GDX). Felix Zulauf, president of Zulauf Asset Management in Switzerland, expects gold’s price to get up and running again “soon,” before heading to the low- to mid-$2,000s.

ZUMAPRESS.com

Fred Hickey, editor, The High-Tech Strategist in Nashua, N.H.: I own a lot of gold stocks. I am not short anything. I don’t know when this thing is going to blow. The European Central Bank promised to print unlimited amounts of money, and it suddenly looked like Europe’s problems were solved. They aren’t. The Bank of England is on QE6 [a sixth round of quantitative easing], and England is heading back into recession. Money-printing doesn’t work. It has been tried for 2,000 years and hasn’t worked. It always ends in tears.

Fred, gold wasn’t such a great investment last year.

Hickey: It has been great for 12 years, but it doesn’t always go up. In the last great gold bull market, gold rose from $100 an ounce in 1970 to $800 in 1980. But it fell 46% in 1975-76. Anyone who left the market then missed the best part of the rally — a subsequent rise of 600%. In the latest 12-year period, there have been five corrections in the gold price, ranging between 15% and 30%. The latest correction was 19%, and gold has bounced off its recent lows already.

You have to be in gold. You have to be in real estate. Semiconductor sales have been poor, yet semiconductor stocks are rising. That is a result of money-printing. That is why the performance of stocks isn’t related to the performance of the economy. Stocks could go up again this year. All assets could go up in price. But you’d better protect yourself. At some point, stocks will underperform and inflation will run higher. That is the history of all monetary inflations.

Stocks will hold some but not all of their value. If you were an investor in Weimar Germany, your stocks lost 90% of their value. The best places to be were in other currencies and gold. But this time around, there is no alternative currency to the dollar. ….

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